One way to limit the supply of money is to tie the dollar to gold. This was the practice in the Gilded Age. The government pledged to convert each dollar into a fixed amount of gold. Since there was not much gold available, federal government could not print many dollars. This galled farmers. Partly because of overproduction, prices for farm crops kept falling. Farmers needed low-interest credit to keep going, and because of the gold standard, they could not get it. Nor could they raise prices. Thousands of farmers lost their land.

Their solution was silver, which was much more abundant than gold. Under pressure from the Populists, Congress in 1890 authorized the Treasury to issue dollars backed by silver as well as gold. This greatly increased the money supply and made credit available at lower rates. But the dollar lost value. The currency was in effect devalued, particularly in the eyes of lenders in Britain, a country on a pure gold standard. Nervous already from various bankruptcies, they called in their dollar loans and converted them into gold.

President Grover Cleveland got the silver act repealed within months. But this did not lessen the concern that the dollar would be devalued. When gold reserves fell below $100 million in April 1893, the panic was on.

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